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fer jurisdiction in Sanders because the new jurisdictional grant was qualified by Congress' preservation of section 405 (h) of title 42 of the United States Code, which precluded such an action. It would appear that a similar problem could also raise in the area of judicial review of final Administrator's decisions since section 1346 (d), as discussed above, could be construed as having an effect similar to that of section 405 (h) in review of Social Security claims.

Finally, adopting the approach contained in S. 364 creates a problem because chapter 7 of the Administrative Procedure Act provides no limitation on when a suit can be brought. This, of course, creates the possibility of challenges of decisions many years old with attendant burdens on both the claimant and the Government. We, therefore, believe that any legislation providing access to the courts for review of the Administrator's decisions should be limited to prospective review only and provide a specific period of time in which such a suit must be instituted following final administrative action.

In addition to the illustrative problems noted above that would result from providing judicial review by subjecting all decisions of the Administrator of Veterans' Affairs to chapter 7 of the Administrative Procedure Act, the specific terminology of S. 364 which amends section 211(a) also creates ambiguities which raise questions as to its effect. For example, while S. 364 purports to subject all decisions of the Administrator to court review, it retains the terminology exempting decisions made pursuant to sections 775, 784, and chapter 37 of title 38. The retention of this language could be construed to deny access to the courts in areas where judicial review is presently available. Although such a construction is probably strained, prudence dictates that any provisions granting judicial review should be clarified to delineate specifically the intent of Congress.

A similar problem results from the initial wording of section 211(a) which provides "On and after October 17, 1940, . . ." and which remains unchanged by S. 364. The obvious effect of such language would be to permit court review of all decisions rendered after that date. This is particularly true since chapter 7 of the Administrative Procedure Act includes no statute of limitations.

Application of the Administrative Procedure Act to the Veterans' Administration

A second major provision of S. 364 would be to subject Veterans' Administration internal procedures to all of the provisions of chapter 5 of title 5 of the United States Code.

Section 3 of S. 364 would provide that "all rules, regulations, orders and any other determination of any kind made by the Administrator of the Veterans' Administration or his delegate shall be subject to the provisions of chapter 5 of title 5, United States Code."

Chapter 5 of the Administrative Procedure Act includes complex provisions dealing with diverse subjects as briefly described hereafter. The major provisions of section 552 of title 5, for example, include the Freedom of Information Act, the Privacy Act and the Sunshine Act. Section 552(a) (1) provides that a person cannot be required to resort to, or be adversely affected by, a matter which should be published in the Federal Register but is not. In addition, section 552 (a) (2)

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provides that certain types of materials, e.g., final orders, staff manuals, or instructions, etc., may not be relied on, used or cited as precedent by an agency against a party unless such materials have been indexed (as described in the section) and either made available or published unless the party has actual and timely notice of their terms.

Section 553 requires publication in the Federal Register of general notice of proposed rulemaking and provides for opportunity for comment by interested parties. The section also provides for certain exceptions which permit publication where opportunity for public comment will not be provided.

Section 554 provides basic guidelines for adjudicative procedures required by statute to be made on the record after an opportunity for a hearing.

The ancillary matters dealt with in section 555 have little effect on adjudicative procedures. Section 555 (d) provides for exercise of agency subpoena powers upon request. There is, however, no grant of basic authority for issuance of subpoenas.

Section 556 provides the basic requirements for hearings mandated under sections 553 and 554. Decision making requirements are spelled out in section 557, both as to initial decisions and agency review of such decisions. Section 557 also prohibits ex parte communications between agency participants and claimants.

Impositions of sanctions and general licensing procedures are dealt with in section 558. This section requires an agency to comply with the hearing and decision making provisions of sections 556 and 557 when deciding licensing applications.

The last section of chapter 5, section 559, states the effect of chapter 5 on other statutes.

The Veterans' Administration is already subject to and complies with many aspects of the foregoing provisions of the Administrative Procedure Act. For example, we are subject to and in compliance with the provisions relating to the Freedom of Information Act, the Privacy Act and the Sunshine Act.

Undoubtedly, then, the impact of S. 364 as it would require Veterans' Administration compliance with provisions of chapter 5 of title 5 would be principally limited to publication and rulemaking procedures under section 553 and to hearing and adjudication procedures contained in sections 554 through 557.

With respect to the former requirements, it should be observed that the agency has voluntarily been in substantial compliance with the publication requirements of section 553 since April 1972. At that time, a regulation was promulgated (38 C.F.R. § 1.12) which requires notice of regulatory changes to be published in the Federal Register in accordance with the provisions of the Administrative Procedure Act. This regulation is binding on all elements of the Veterans' Administration.

The only possible effect of enactment of S. 364 in this regard might be to increase the amount of material subject to required publication. For example, we might be required to publish instructions as to how an individual could obtain information regarding applying for a specific benefit, where the pertinent forms could be obtained, and the process used in making determinations.

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In view of our present voluntary compliance with this aspect of the Administrative Procedure Act, we would have no objection to being made subject to the provisions of section 553.

The impact of S. 364 in the areas of Veterans' Administration hearing and adjudication procedures is impossible to assess. However, we do not believe that Veterans' Administration claims processing would be enhanced if the agency should be required to comply with the more formal adjudication and hearing requirements of sections 554 and 556 at the initial processing stage or at the appellate level.

We believe that the present procedures for adjudicative processing and for hearings as outlined earlier and as discussed in Attachment. "B" illustrate that such procedures meet the basic intent expressed by the Congress in enacting sections 554 and 556. The legislative intent was to insure sections 554 and 556. The legislative intent was to insure basic fairness in claims processing and to provide for establishment of an adequate record for possible judicial review. Further, the general purpose of the Administrative Procedure Act was to improve the administration of justice by prescribing fair administrative procedures to be applied by Federal agencies. It was intended to form an outline of minimum rights and procedures applicable to such agencies. That it was aimed at prescribing uniformity of policy and procedure among regulatory or enforcement agencies is indicated by the exceptions in sections 4 and 5 of the original Act (sections 553 and 554). The exemptions were aimed at function and not at agencies. Among the exempted functions were those designed to provide benefits. See H.R. Rep. No. 2133, 82d Cong., 2d sess. 5 (1952).

We believe that current Veterans' Administration procedures meet the intent of these requirements and provide due process to claimants. We are further convinced that the present informal, non-advisory nature of Veterans' Administration proceedings are beneficial to the individual claimant and meet the need for timely claims processing. In addition, they appear to be satisfactory to the vast majority of the veteran population.

As an example, in fiscal year 1976, the Agency handled 13,319,735 cases at the field station level, 9,590,335 of which involved decisions of appealable issues. During that fiscal year, 53,073 (one-half of 1%) of these decisions were appealed. Of this 26,712 or about half of these appeals were submitted at the field station level, with 29,945 actually submitted to the Board of Veterans Appeals. The contrast between the number of cases appealed and the large number of initial decisions rendered indicates that the majority of claimants are satisfied with our present adjudication procedures. Increasing the complexity of claims processing would not, in our opinion, enhance the quality of the program, nor would it provide a greater degree of fundamental fairness.

While we do not assert that the Veterans' Administration is not, and should not be, covered by some provisions of the Administrative Procedure Act, we believe the requisites of fairness and due process can best be administered outside the confines of the Act.

To the extent Congress concludes that changes in the agency procedures are desirable, we believe that these more appropriately should be enacted independently of chapter 5 of the Administrative Procedure

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Act. This would provide an opportunity for a more precise specification within title 38 of any such changes, predicated upon conformity with the nature and realities of unique Veterans' Administration functions and procedures.

We therefore oppose bringing Veterans' Administration adjudicatory and hearing procedures at initial processing and appellate levels within the constraints of sections 554 through 557 of the Administrative Procedure Act. We suggest that any defects perceived in claims processing, appellate, or hearing procedures be corrected by enactment of amendatory legislation to title 38. If the Congress deems it advisable to formalize these procedures, we suggest such formalization should occur at the appellate level rather than at the initial claims level.

We wish to note that the diversity of the Veterans' Administration programs makes it impossible to provide identical procedures for all programs.

The loan guaranty program is different from the other programs in that in the vast majority of loan guaranty matters, the Agency does not deal directly with eligible veterans or dependents. After the initial determination of eligibility, which is adjudicatory in nature, the Agency deals with third party independent lending institutions and to some extent with builders. Once basic eligibility is established by the Veterans' Administration, the veteran or dependent then deals directly with the third party. Such an individual has often signed a contract for a home purchase allowing a fixed time to secure a loan, possibly 60 to 90 days. In many cases, the third party seller would not be concerned if the individual were unable to obtain approval of a Veterans' Administration loan and would sell the property to someone else.

Due to these unique characteristics of the loan guaranty program, we do not consider it appropriate to subject these kinds of decisions to the strict requirements of chapter 5 of the Administrative Procedure Act. The adjudicative procedures of the compensation and pension program and of the education program are similar in nature. The criteria for eligibility differ, but adjudicative procedures are initiated in both programs by filing a claim. This results in a determination as to eligibility for the particular benefit sought. The same basic notice and hearing requirements apply to both programs. Appellate rights and procedures are also identical. The adjudicatory procedures were explained in greater detail in our earlier discussion regarding judicial review and in attachment "B".

It should also be observed that current Board of Veterans Appeals' procedures do not deviate in any substantial degree from the requirements of section 554. Review is on the record and the appellant is accorded an opportunity for hearing and the right to question witnesses present. The proceedings are informal in nature, however, and cross-examination, as such, is not permitted. If the Veterans' Administration should be subjected to provisions of section 554, the requirement of the right of cross-examination, if coupled with the right to compel the attendance of witnesses, could present serious difficulties. One troubling aspect is the vulnerability of Veterans' Administration physicians to this procedure. They no doubt would be the principal target of subpoenas, if not protected under the business records ex

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ception to the Hearsay Rule. If the right to compel attendance became incorporated into Board of Veterans Appeals' practice, it is quite possible that it would have a detrimental effect on the availability of physicians for employment with the Veterans Administration. Similar considerations would apply to the present use by the Board of Veterans Appeals of written opinions from independent medical specialists.

As indicated earlier, we believe the interest of claimants can best be served by maintaining the informal, nonadversary nature of these procedures. If a decision is not supported by substantial evidence or if a veteran is denied a basic right guaranteed by the Constitution, then judicial review would be available to correct such errors.

Determinations regarding basic eligibility for medical care are adjudications made under procedures applicable to the compensation and pension program, with the same notice, hearing, and appeal provisions applicable. Other decisions in the medical care program involve judgmental determinations as to what is proper medical treatment. It would be detrimental to the medical program to require formalization of decisions based on a physician's professional opinion as to whether a veteran's condition is susceptible to cure or substantial improvement from the provision of hospital, ambulatory, nursing home, or domiciliary care. It would be impractical to formalize medical decision making regarding patient hospital admissions or discharges, the necessity for and nature of medical treatment, or a medical decision to deny a patient's request for specific drugs or treatment. In view of the foregoing, we oppose bringing the Veterans' Administration with sections 554 through 557 of the Administrative Procedure Act and recommend any amendatory legislation deemed necessary to strengthen existing procedures be made through change to title 38, United States Code.

In addition to the general problems the Veterans' Administration could expect to be faced with if their provisions were made subject to chapter 5 of the Administrative Procedure Act, we also note certain technical problems created by the language of section 3 of S. 364. The provisions of section 3 purport to require the Veterans' Administration to comply with chapter 5 of the Administrative Procedure Act. However, one initial question is raised by the terminology of sections 553 and 554 which creates specific exemptions relieving the Veterans' Administration from many of the requirements of chapter 5.

In this regard, section 553 expressly exempts its application in matters "relating to agency management or personnel or to public property, loans, grants, benefits, or contracts." In view of the broad terms of the exemption and the fact that almost all of the Veterans' Administration's programs involve matters relating to either "loans" or "benefits", it would appear that section 3 of S. 364 as written would not subject the Veterans' Administration to the rulemaking requirements of section 553 of the Administrative Procedures Act.

A similar problem arises under the language of section 554, Adjudication. Section 554 applied only in cases of adjudication required by statute to be determined on the record after opportunity for an agency hearing. Since there is no statutory requirement (as opposed to agency procedure) for initial adjudications based on the record after oppor